Monopoly

Posted in Finance, Accounting and Economics Terms, Total Reads: 1143
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Definition: Monopoly

Monopoly occurs when there is a single supplier for the particular product in the whole market. The characteristics of monopoly are:

  • High profits: As the firm is the only supplier in the market, hence it can take undue advantage and can charge high prices to its customers to generate high profits.
  • Price decision: The decision of the market price is made by the company by its own and not according to the competing products.
  • Entry Barriers are high: The firm who has the monopoly holds the market well and hence it is tough for a new entrant to enter the market.
  • One seller: Only one seller is present in the whole industry which serves the whole of the population and hence we can say that the seller in itself is the industry.
  • Price Discrimination: The seller can change the price, quantity supplied as much as he wants at any time.


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